Building resilience into World Bank operations · Building resilience into World Bank operations...

Building resilience into World Bank operations

Julie Rozenberg

London

November 13th 2015

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Many investment decisions have long term consequences. Infrastructure in particular can shape development for decades or centuries, a duration that often extends beyond infrastructure’s lifetime because the economic system reorganizes itself around them.

— Hallegatte et al., Investment Decision MakingUnder Deep Uncertainty, World Bank

“Prediction is very difficult, especially about the future” (N. Bohr)

Year 2000, seen from 1900…(From Hildebrands)

What will people want/like in 2050?

What technologies will we have?

What climate will we have?

Climate models try to guess that…

The Meteo-France model, from IPCC

But they disagree with each other

The Meteo-France and the Australian model, from IPCC

… and we have a lot of models…

… and future climates depend on future climate policies…

KOSHI BASIN, NEPAL

Is it hopeless?

No, but we need to change the way we make decisions

Traditional Planning

Asks “What Will The Future Bring?”

What will thefuture be?

What is the best near-term decision?

How sensitive is our decision to our

prediction?

“Traditional Planning”

• Conditions are stable or easy to predict

• There is consensus among stakeholders

Works well when:

“What if I’m wrong?”

Using Historical data with unpredictable variables can lead to bad decisions

• In the early 1970s forecasters made projections of U.S energy use based on a century of data

Gross national product (trillions of 1958 dollars)

2.2

2.0

1.8

1.6

1.4

1.2

1.0

.8

.6

.4

.2

0180

Energy use (1015 Btu per year)

0

Historical trend

continued1970

19201929

19401950

1960

1910

1973

1973

19001890

20 40 60 80 100 120 140 160

1975 Scenarios

Gross national product (trillions of 1958 dollars)

2.2

2.0

1.8

1.6

1.4

1.2

1.0

.8

.6

.4

.2

0180

Energy use (1015 Btu per year)

0

Historical trend

continued1970

19201929

19401950

1960

1910

1973

1973

19001890

20 40 60 80 100 120 140 160

2000 Actual

1990

19801977

1975 Scenarios2000 Actual

1990

19801977

• In the early 1970s forecasters made projections of U.S energy use based on a century of data

…they were all wrong

Using Historical data with unpredictable variables can lead to bad decisions

What will the future be?

What is the best near-term decision?

How sensitive is our decision to our

predictions?

“Predict Then Act”

Decision Making Under Uncertainty Runs the Analysis Backwards

Develop strategy adaptations to

reduce vulnerabilities

Identify vulnerabilities of these strategies

What are the available

strategies?

Decision Making Under Uncertainty (DMU)

Decision Making Under Uncertainty Runs the Analysis Backwards

Develop strategy adaptations to

reduce vulnerabilities

Identify vulnerabilities of these strategies

What are the available

strategies?

Decision Making Under Uncertainty (DMU)

• Robust decision making

• Decision scaling

• Robust optimization

• Adaptation pathways

• …

1Carefully define your metrics of success

2Think about possibilities

3Don’t “wait” for new information

Learning should be part of the plan

4Favor flexible solutions that can be

adjusted

In all steps,Engage with stakeholders

DMU is used to improve decision-making in various WB sectors

water management

energy resource management

flood risk management

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Lima (Peru) Ho Chi Minh City, Colombo Turkey, Nepal

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The Decision Tree Framework Identifies Climate Vulnerabilities

and Provides Process for Addressing Them

The process for adding resilience to

design begins with identifying what

causes system to fail

Next, alternatives that reduce

vulnerabilities need to be identified and

evaluated

The Decision Tree Framework provides a

process for identifying the need for and

value added of resilience measures and a

process for selecting best course of action

Based on principles of Decision Making

Under Uncertainty

Work done by the World Bank and University of Massachusetts

Work done by the World Bank and University of Massachusetts

Climate Stress Results for Original Design – System Very

Fragile!

System Fails for these climate changes

System Satisfactory

for current climate

Threshold for

satisfactory

performance

Work done by the World Bank and University of Massachusetts

Climate Stress Results for Adapted Design – System

Resilient!

Additional Resilience

Gained

Original Threshold

New Threshold of

Satisfactory Performance

Work done by the World Bank and University of Massachusetts

Resilience cost curve for Hydropower

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

Real time sedimentmonitoring

Hydraulic StressTesting

Desanding Basins Enlarge Diversion Enlarge Spillway

Resilie

nce C

ost

($M

)

Increasing Risk Reduction

Resilience Cost Curve - Upper Trishuli 1

(Need to quantify via

Expected Value of Risk

Reduction)Work done by the World Bank and University of Massachusetts

• 6mm rainfall annually

• Depends on water from three river basins

– Andean glaciers nearly gone

– Andean rainfall is vulnerable to climate change

Lima faces major water-

related challenges

The future is deeply uncertain

• Rapid population growth may or may not continue

…2040

?

Work done by the World Bank and Evolving Logics

The future is deeply uncertain

• Climate projections

disagree

• Droughts may become

more common

+23%-15%

Much more

precipitation

Much less

precipitation

Work done by the World Bank and Evolving Logics

Scope Problem

Develop Model

Run Simulations

Analyze

Vulnerabilities

Analyze

Tradeoffs

An Iterative, Participatory Process Can Help

Design Robust Investments

Robust Projects

Work done by the World Bank and Evolving Logics

Scope Problem

How Can We Help Lima’s Water Utility Plan

For An Uncertain Future?

How can we make sure the water supply

system will perform well in the future, i.e.

- Ensures water reliability

- Is cost-effective

What are the vulnerabilities of the current

water supply system?

Work done by the World Bank and Evolving Logics

Step 1: A decision matrix can help us structure the problem and think of

possible solutions

Uncertainties Options

Uncertain factors out of our control Decisions and actions that we can

choose from

Performance Metrics Models And Data

How do we evaluate the performance of

our system?

We use these to evaluate our options’

performance, according to the chosen

metrics, under uncertainty

Work done by the World Bank and Evolving Logics

Step 1: A decision matrix can help us structure the problem and think of

possible solutions

Uncertainties Options

Uncertain factors out of our control Decisions and actions that we can

choose from

Performance Metrics Models And Data

How do we evaluate the performance of

our system?

We use these to evaluate our options’

performance, according to the chosen

metrics, under uncertainty

Work done by the World Bank and Evolving Logics

Step 1: A decision matrix can help us structure the problem and think of

possible solutions

Uncertainties Options

Uncertain factors out of our control Decisions and actions that we can

choose from

Performance Metrics Models And Data

How do we evaluate the performance of

our system?

We use these to evaluate our options’

performance, according to the chosen

metrics, under uncertainty

Work done by the World Bank and Evolving Logics

Step 1: A decision matrix can help us structure the problem and think of

possible solutions

Uncertainties Options

Uncertain factors out of our control Decisions and actions that we can

choose from

Performance Metrics Models And Data

How do we evaluate the performance of

our options?

We use these to evaluate our options’

performance, according to the chosen

metrics, under uncertainty

Work done by the World Bank and Evolving Logics

Uncertainties Options

Demand

Streamflow

Master Plan (a combination of 14

projects for increasing water supply)

Performance Metrics Models And Data

Water reliability (90% of simulated

months with at least 90% met demand)

Cost of projects

WEAP model

Step 1: A decision matrix can help us structure the

problem and think of possible solutions

Work done by the World Bank and Evolving Logics

Scope Problem

Develop Model

Run Simulations

Step 2: Case Generation

A model of the system helps us simulate its

performance after many plausible futures

Work done by the World Bank and Evolving Logics

Step 2: 300 futures that are each a combination of

demand and change in streamflow

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Demand Projection

1120 Mm3

No climate change

Work done by the

World Bank and

Evolving Logics

Step 2: 300 futures that are each a combination of

demand and change in streamflow

40

Work done by the

World Bank and

Evolving Logics

Scope Problem

Develop Model

Run Simulations

Analyze

Vulnerabilities

Step 3: Vulnerabilities

Under which cases does the system fail?Work done by the

World Bank and

Evolving Logics

Step 3. Vulnerability Analysis, Current

System

42

Work done by the

World Bank and

Evolving Logics

Step 3. Vulnerability Analysis, With

Master Plan

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Work done by the

World Bank and

Evolving Logics

Scope Problem

Develop Model

Run Simulations

Analyze

Vulnerabilities

Analyze

Tradeoffs

How Can We Help Lima’s Water Utility Plan

For An Uncertain Future?

Robust, Flexible,

No-Regret

ProjectsWork done by the

World Bank and

Evolving Logics

Step4: Trade-offs and adaptive strategies

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Work done by the

World Bank and

Evolving Logics

Thank you!jrozenberg@worldbank.org